SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark-One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 0-9514
ANDREW CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 36-2092797
(State or other jurisdiction of (IRS Employer
incorporation or organization) identification No.)
10500 W. 153rd Street, Orland Park, Illinois 60462
(Address of principal executive offices and zip code)
(708) 349-3300
(Registrant's telephone number, including area code)
No Change
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period as the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $.01 Par Value--60,605,668 shares as of December 31, 1996
<PAGE>
INDEX
ANDREW CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets--December 31, 1996 and September
30, 1996.
Consolidated statements of income--Three months ended December
31, 1996 and 1995.
Consolidated statements of cash flows--Three months ended
December 31, 1996 and 1995.
Notes to consolidated financial statements--December 31, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
Exhibit 11 Computation of Earnings per Share.
Exhibit 27 Financial Data Schedule.
SIGNATURES
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
December 31 September 30
1996 1996
---------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 64,781 $ 31,295
Accounts receivable, less allowances 186,115 197,589
(Dec. $4,008; Sept. $3,648)
Inventories
Finished products 55,618 56,947
Materials and work in process 113,480 109,662
--------- ---------
169,098 166,609
Miscellaneous current assets 9,099 6,491
--------- ---------
TOTAL CURRENT ASSETS 429,093 401,984
OTHER ASSETS
Costs in excess of net assets of businesses
acquired, less accumulated amortization
(Dec. $20,714; Sept. $19,732) 41,758 42,667
Investments in and advances to affiliates 43,944 42,510
Investments and other assets 11,381 11,368
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 11,510 11,103
Building 69,038 68,248
Equipment 266,102 254,737
Allowances for depreciation and amortization (209,808) (201,388)
---------- ---------
136,842 132,700
---------- ---------
TOTAL ASSETS $ 663,018 $ 631,229
========== =========
<FN>
The balance sheet at September 30, 1996 has been derived from the audited
financial statements at that date.
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Continued)
<CAPTION>
December 31 September 30
1996 1996
----------- ----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 2,813 $ --
Accounts payable 38,321 38,887
Accrued expenses and other liabilities 28,891 26,170
Compensation and related expenses 17,605 27,006
Income taxes 27,368 20,367
Current portion of long-term debt 4,984 4,952
------------ ----------
TOTAL CURRENT LIABILITIES 119,982 117,382
------------ ----------
DEFERRED LIABILITIES 8,126 7,919
LONG-TERM DEBT, less current portion 40,377 40,423
MINORITY INTEREST 9,421 9,291
STOCKHOLDERS' EQUITY
Common stock (par value, $.01 a share:
100,000,000 shares authorized;
68,479,398 shares issued, including treasury) 685 685
Additional paid-in capital 44,863 43,257
Foreign currency translation 2,457 349
Retained earnings 483,254 458,914
Treasury stock, at cost (7,873,730 shares in Dec 1996;
8,047,229 shares in Sept 1996) (46,147) (46,991)
------------ ----------
485,112 456,214
------------ ----------
TOTAL LIABILITIES AND EQUITY $ 663,018 $ 631,229
============ ==========
<FN>
The balance sheet at September 30, 1996 has been derived from the audited
financial statements at that date.
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended
December 31
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
SALES $ 231,664 $ 177,924
Cost of products sold 141,692 106,071
---------- ----------
GROSS PROFIT 89,972 71,853
OPERATING EXPENSES
Research and development 9,849 7,411
Sales and administrative 42,011 36,972
---------- ----------
51,860 44,383
---------- ----------
OPERATING INCOME 38,112 27,470
OTHER
Interest expense 1,259 1,277
Interest income (704) (658)
Other expense 111 427
---------- ----------
666 1,046
---------- ----------
INCOME BEFORE INCOME TAXES 37,446 26,424
Income taxes 13,106 9,513
---------- ----------
NET INCOME $ 24,340 $ 16,911
========== ==========
NET INCOME PER AVERAGE SHARE OF
COMMON STOCK OUTSTANDING $ 0.40 $ 0.28
========== ==========
AVERAGE SHARES OUTSTANDING 61,394 60,966
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
<CAPTION>
Three Months Ended
December 31
----------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 24,340 $ 16,911
ADJUSTMENTS TO NET INCOME
Depreciation and amortization 9,304 7,082
Decrease (Increase) in accounts receivable 11,692 (4,852)
Increase in inventories (820) (7,685)
(Increase) Decrease in miscellaneous
current and other assets (2,501) 113
Increase in receivables from affiliates (145) (532)
Decrease in accounts payable
and other liabilities (1,788) (415)
Other 95 (72)
--------- ---------
NET CASH FROM OPERATIONS 40,177 10,550
INVESTING ACTIVITIES
Capital expenditures (11,519) (14,094)
Acquisition of businesses, net of cash acquired -- (14,453)
Investments in and advances to affiliates (1,434) (4,990)
Proceeds from sale of property, plant
and equipment 118 120
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (12,835) (33,417)
FINANCING ACTIVITIES
Short-term borrowings (payments)-net 2,807 (362)
Stock purchase and option plans 2,714 356
--------- ---------
NET CASH FROM (USED IN) FINANCING ACTIVITIES 5,521 (6)
Effect of exchange rate changes on cash 623 (298)
--------- ---------
INCREASE (DECREASE) IN THE PERIOD 33,486 (23,171)
Cash and equivalents at beginning of period 31,295 46,064
--------- ---------
CASH AND EQUIVALENTS AT END OF PERIOD $ 64,781 $ 22,893
========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
ANDREW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended December 31,
1996 are not necessarily indicative of the results that may be expected for the
year ending September 30, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
company's annual report on Form 10-K for the year ended September 30, 1996.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Andrew Corporation set first quarter records in orders, sales, net income and
net income per share. Net sales for the quarter ended December 31, 1996 were
$231.7 million, an increase of 30% over the first three months of fiscal year
1996. Both U.S. and international markets drove this increase. Infrastructure
construction of personal communications services (PCS) and sales of wireless
hand set accessories contributed to the domestic sales growth, while the South
American market lead the international growth. The company's recent acquisitions
of The Antenna Company and Mapra Industria e Comercio, Ltda. and Gerbo
Telecommunicacoes, Ltda. have also contributed to the overall sales growth for
the quarter.
Cost of products sold, as a percentage of sales, was 61.2% for the first three
months of fiscal year 1997 compared to 59.6% for the first quarter of fiscal
year 1996. Increased customer demand for lower margin commercial products,
increased sales of wireless accessories products and increased price competition
were partially offset by decreased copper prices causing the growth in cost of
products sold, as a percentage of sales.
Operating expenses, as a percentage of sales, decreased 2.5% compared to prior
year. As a percentage of sales, research and development expenses remained
relatively stable, while sales and administrative expenses decreased 2.7%
compared to the same period last year, mainly due to productivity improvements
in the commercial segment. Total research and development spending
increased $2.4 million compared to the first quarter of fiscal year 1996, while
sales and administrative spending increased $5.0 million.
Net interest expense remained relatively unchanged compared to the first quarter
of fiscal year 1996. Other expense for the first quarter of fiscal year 1997
totaled $.1 million compared to $.4 million for the first three months of fiscal
year 1996. Recording the minority interest's share in the income of the
company's operations in Brazil and South Africa partially offset foreign
exchange gains resulting in a slight improvement in other expense for the first
quarter of fiscal year 1997 when compared to the same period last year.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash from operations increased $29.6 million compared to the first quarter of
fiscal year 1996. Collections of strong fourth quarter fiscal year 1996 sales,
higher first quarter net income and decreased inventory levels in the commercial
business segment were responsible for the increased liquidity.
Cash used in investing activities decreased $20.6 million to $12.8 million for
the quarter. Capital spending for the first quarter of fiscal year 1997 totaled
$11.5 million compared to $14.1 million for the same period last year. In the
first quarter of fiscal year 1996, the company purchased a majority interest in
Mapra Industria e Comercio, Ltda. and Gerbo Telecommunicacoes e Servicos, Ltda.
for $14.5 million, net of cash received.
Cash from financing activities, for the quarter, increased $5.5 million compared
to the same period last year. This increase is attributable to increased stock
option activity and funds borrowed for the construction of a cable manufacturing
plant in Sorocaba, Brazil.
<PAGE>
PART II--OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
a) Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
11 Computation of Earnings per Share
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
On November 26, 1996, the Registrant filed under Item 5 of Form 8-K a
description of actions taken by the Board of Directors of the company (i) to
terminate the company's stockholder rights plan and to redeem all rights
outstanding thereunder and (ii) to implement a new stockholder rights plan and
to declare a dividend of one common stock purchase right for each outstanding
share of Common Stock of the company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date January 27, 1997 F. L. English
--------------------- -------------
F. L. English
Chairman, President and Chief
Executive Officer
Date January 27, 1997 C. R. Nicholas
--------------------- --------------
C. R. Nicholas
Executive Vice President and Chief
Financial Officer
EXHIBIT 11
ANDREW CORPORATION
Computation of Earnings Per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
December 31
----------------------
1996 1995
-------- --------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Average shares outstanding 60,482 60,071
Net effect of dilutive stock options--
based on the treasury stock method
using average market price 910 895
======== ========
Total 61,392 60,966
======== ========
Net income $24,340 $16,911
======== ========
Per share amount $ 0.40 0.28
======== ========
FULLY DILUTED EARNINGS PER SHARE
Average shares outstanding 60,482 60,071
Net effect of dilutive stock options--
based on the treasury stock method
using quarter end market price 912 895
======== ========
Total 61,394 60,966
======== ========
Net income $24,340 16,911
======== ========
Per share amount $ 0.40 0.28
======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 64,781
<SECURITIES> 0
<RECEIVABLES> 190,123
<ALLOWANCES> 4,008
<INVENTORY> 169,098
<CURRENT-ASSETS> 429,093
<PP&E> 346,650
<DEPRECIATION> 209,808
<TOTAL-ASSETS> 663,018
<CURRENT-LIABILITIES> 119,982
<BONDS> 40,377
0
0
<COMMON> 685
<OTHER-SE> 484,427
<TOTAL-LIABILITY-AND-EQUITY> 663,018
<SALES> 231,664
<TOTAL-REVENUES> 231,664
<CGS> 141,692
<TOTAL-COSTS> 141,692
<OTHER-EXPENSES> 51,860
<LOSS-PROVISION> 296
<INTEREST-EXPENSE> 1,259
<INCOME-PRETAX> 37,446
<INCOME-TAX> 13,106
<INCOME-CONTINUING> 24,340
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,340
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
